Pumping Money Into the Leaky Tire

The SDC's idea gets last weeks Boot.

You have to give the City of Bend credit for trying to come up with a way to jump-start this town’s economy. The only problem is it keeps coming up with the same idea over and over again.

Almost four years ago, after the real estate bubble had popped and folks here had finally figured out it wasn’t going to re-inflate any time soon, the city council had the bright idea of letting developers defer payment of SDCs, or systems development charges – fees paid to (partially) cover the cost of road improvements, sewers and other things made necessary when somebody put up a new housing subdivision or shopping mall. Instead of having to pay SDCs up front, the new policy allowed developers to wait nine months or until they applied for an occupancy permit, whichever came first.

The deferral program had no noticeable positive effect on the local real estate market or the economy in general. Nevertheless, after one year the local builders came back and asked the council to extend it a year. The council did. And a year later the builders asked for another extension, and the council obliged again. By now the deferral policy appears to have become a permanent fixture.

And now the city council appears poised to create a new wrinkle in it. It’s considering a proposal to let businesses pay their SDCs with a three-year, no-interest loan of up to $200,000. There’s no reason to think this new variation of the deferral program will get Bend’s economy off the launching pad any more than the original version has. Both of them are like trying to pump up a tire with a gaping hole in it.

The real estate market, and the building industry that depends on it, are depressed in almost every area of the country. There are a few encouraging signs on the national horizon, but until the economic recovery is far more robust, the buyers simply won’t be around to snap up all those houses with “For Sale” signs on them and generate a demand to build more. Delaying, deferring or even completely eliminating SDCs won’t do anything to make that happen.

What it will do is deprive the city of money it can ill afford to pass up – money that could be used to fill potholes, improve sewer and water systems, hire police and firefighters, and pay for a hundred other things that help make a city a good place to live.

Bend Mayor Jeff Eager, in touting the latest SDC gimmick, described it as a way of “making Bend a more attractive place to create jobs.” But letting city services deteriorate for lack of revenue won’t make it more appealing to job-creators or job-holders. No matter how generous the tax structure is, damn few people will want to live in Dogpatch-on-the-Deschutes.

It would be great if the city council gave up on the whole SDC deferral idea, but that’s probably too much to ask. The least it can do is join us in giving THE BOOT to this latest incarnation of it.